Measuring Ad Effectiveness Using Geo Experiments

Advertisers have a fundamental need to quantify the effectiveness of their advertising. For search ad spend, this information provides a basis for formulating strategies related to bidding, budgeting, and campaign design. One approach that Google has successfully employed to measure advertising effectiveness is geo experiments. In these experiments, non-overlapping geographic regions are randomly assigned to a control or treatment condition, and each region realizes its assigned condition through the use of geo-targeted advertising. This paper describes the application of geo experiments and demonstrates that they are conceptually simple, have a systematic and effective design process, and provide results that are easy to interpret.

• Economics and Electronic Commerce